In a move that could dramatically expand access to private market investing, a newly signed executive order from the Trump administration aims to lower restrictions on adding private assets like private equity in defined contribution retirement plans such as 401(k)s. While this could open new opportunities for millions of American investors, Bilge Yilmaz and Burcu Esmer, academic directors of Wharton’s Harris Family Alternative Investments Program, note the important questions this raises about access, investing expertise, and how to plan for the long run.
“Public pension plans are the largest contributors of capital to the broadly defined private equity asset class,” explains Yilmaz. “This makes sense from several points of view. These are long-term investments by design and allow public employees to have access to the illiquidity premium. It provides higher and differentiated returns that allow a better portfolio construction.”
Defined contribution plans
